The Weekly Update

A relatively quiet Thanksgiving week saw the yield on the 10-year US Treasury close unchanged from the previous week and the dollar (DXY Index) tumble for the third consecutive week. Meanwhile, the offshore renminbi broke through the 6.60 level on Friday, closing 0.73% stronger against the dollar.

This week tax reform could attract much attention as Senate votes on its proposed tax bill (expected on Friday); Republican policymakers would like to get the tax bills reconciled by Christmas. Meanwhile, markets will be watching the German coalition talks this week as Merkel’s CDU party discusses a potential ‘grand coalition’ with the Social Democrats (SPD). This morning we saw China’s Industrial Profit reading for October fall marginally; although still robust at 25.1%. There’s not much in the way of other key economic data prints today, however, what could be of interest is New York Fed President Dudley speech on the “U.S. Economy: 10 Years After the Crisis”. Tuesday’s focus will be the confirmation hearing for newly nominated Jerome Powell, who is said to favour gradual rate hikes and understands the needs for the easing financial regulation. Meanwhile, President Trump will gather with Republican and Democratic leaders to kick-start the federal spending debate ahead of the Dec, 8 deadline.

Fed Chair Janet Yellen’s is due to testify before the Congressional Joint economic Committee in Washington on Wednesday, this will be her last appearance in front of Congress as Fed Chair. Key data releases out of the US include the second estimate for Q3’17 GDP, personal consumption and core PCE, the beige book will also be released on Wednesday. A busy data day on Thursday will kick-off with China PMI readings (we also have the Caixin PMI release on Friday) and Japan’s CPI October reading, US personal income and personal spending prints, and the Fed’s favoured PCE deflator (and core) releases for October.

OPEC and Russian leaders will gather in Vienna on Thursday; there have been rumours that as much as a 9-month extension to supply cuts could be agreed upon (a 6-month extension could be more likely with a subsequent review following this period). Brent continued to hold up last week, closing at $63.86 (up +1.82%). Thursday could also see an interest rate hike from the Bank of Korea. Then on Friday we have the US ISM figures for November, there will also be a number of Fed members speaking, including Kaplan and Bullard; who is due to speak on economic outlook.

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